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tv   Worldwide Exchange  CNBC  September 13, 2012 4:00am-6:00am EDT

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. welcome to worldwide exchange. >> dhethese are your headlines. a dim view of the proposed $48 billion mega merger citing a bumpy ride ahead. >> and berlin has yet to give its backing for the deal, but the german government vows to work closely with paris on the merger. >> and to qe or not to qe, that's the question before the fed today as the central bank looks to provide a fresh boost to the u.s. economy. >> plus indonesia, new zealand and even the bank of korea hold
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rates steady as policymakers wait to see what comes out of washington. >> so welcome to today's show. another bric on the road with the dutch election. >> i have to say the european events we were worried about heading into the week, for the most part, it's check the box. it wasn't a catastrophe. center right party probably means a pro european attitude. >> and then will the fed check the box today. >> this is the question. plenty to get through on today's program. pro europe party's leader will be in the hague to discuss the outcome of those elections. and five is finally alive. apple showed off the new iphone. we'll get reaction from hong kong.
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>> the swiss national bank keeps its cap on the franc, but trims back growth forecast. we'll get a view from zurich. plus we'll speak to one economist in the u.s. about the case for and against more stimulus. >> waiting on 5 and wait to see on qe-3. a lot of alliteration going on here. meanwhile shares lower on bae as reaction from the street piles up. analysts at barclays have taken a dim view on both stocks recommending investors to take profit in bae. analysts say the spirit disagrees saying talks highlight the cheap valuation of the stock. some saying talks will dilute their attractiveness. companies would keep separate share listings in london and
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paris. >> a combination of the two would create a giant to rival boeing, but the ceo says he's not threatened about the possibility of a deal. >> the merger is not a done deal, it still requires approval from the ads board as well as the green light from antitrust authorities in france, germany, the uk and the bae largest customer, the united states. so where do we go from here? katherine boyle joins us, she's been writing about this online. a very good morning to you. let's talk about the impediments to something getting done. which is the biggest one in your opinion? >> well, i don't think you're going to see much political interference actually because i've heard from sources that in fact the main government evolved in the european side have all been consulted off the record
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and have given the nod. of course that didn't mean that there aren't other governments that could cause some trouble. as you mentioned, be have boeing, but we also have lockheed martin and northrup who are even bigger players in the defense market. >> and it raises the question is it a bigger deal for civilian air space market or defense. and obviously it's defense. >> the u.s. defense market which is still the world's biggest by several multiples. and why there's been a lot of noise about saudi arabia and china and other countries which are sort of bunch onin burgeoni. >> they need to get away from the reliance on the u.s. market, don't you think? >> i think bae also may have more power within sort of broader contracts within the defense market with some of
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their strength. for example eads has a strong market in the space which will be growing. >> one interesting catalyst appantap pant apparently goes back to the fact that they want to operate more independently, wants to combat that perception. and this deal i suppose is seen as being an important step in doing so. >> like a lot of the rest of the eurozone in that you seem to have to have a german to come into try and sort all of this out because of course this stock has been hard to cap for years with the perception it's more like a wick of the french and german government. but there does seem to be the idea of a golden share for the french, the german and uk governments which is something
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that may sort of hold investors back, what's really changed if ultimately you still have politicians who can veto and a lot will depend on what particular governments -- for example if a more social government comes in, what their attitude may be. of course we haven't talked about the potential for union objections across the board, particularly in france. >> a lot of hurdles bottom line. katherine boyle, thanks so much for coming on this morning. >> in eads statement yesterday, they went out of their way to highlight this a long way of being a done deal. >> and luke warm response from governments indicates we could have plenty more on this discussion. and daimler say it could be forced to sell it stake. so many different shareholders here. what are these particular onces up to?
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>> well, i think daimler would actually be quite supportive of a disliissolution of the entirel because they hold about 15% and they've been trying to sell that asset down and it's not been happening. so the conclusion was they would be selling about 7.5% to the german government. and if they could sell down the entire stake of 15%, i think they would be quite happy. so all in all of course they are already talking about, well, if this deal is going to go ahead, we may sell the rest of our into the open market. so from that point of view, i don't think it's too bad. they said they have been asked for support and will work closely with the government on
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that deal. >> okay, patricia, thanks for now. catch you later. >> the dutch liberal party has clinched a narrow victory in yesterday's general election and is now set to launch negotiations to form a governing coalition with the labor party. the results have shown firm rejection of the euro skeptic populous party on both the far left and the far right. >> people, this is a strong boost for the agenda that we've laid out, to go on with our policy, to enable the country to emerge stronger from this crisis, to continue to reduce our government 00 difference sit, to continue in our upward trend. >> carolyn is in the hague. they still have to form a coalition government. >> yes, the talks will actually start tomorrow, but this was a huge victory for the pro european parties especially because for the better part of
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the summer, we thought the euro skeptics would form a party. this is a vote with limitations. the prime minister said he will not grant greece a third bailout package. we'll be talk about all the implications for the wider eurozone in about ten minutes time, talking to the government's main economic adviser but also to ing. more coming up very soon. >> okay, carolyn, thanks very much for that. >> and policymakers are holding on to their fire power and stuck to skicript by keeping it at 2. as expected. it the big surprise is from the bank of core re, a it held rates
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saided steady. rhie, what were they talking about as they gave that decision? >> exports falling for two straight months and domestic demand sluggish. so many read the freeze as a sign that the bank of korea probably wants to hold its fire for now while taking the impact of the july rate cut. plus the ecb's bond buying plan and possible easing measures from the u.s. federal reserve could also change things. and the bok governor says july rate cut helped lower rates while consumer prices are set to pick up. so instead of cutting the policy rate, they decided to expand its financial support to small business and low income self-employed people from october. back over to you. >> rhie, thanks for that. last week's ties in the central bank also helped keep its rates unchanged at 3% after two rate
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cuts. they were asked what would call the central bank to act again. >> it's possible that there will be more accommodation from the monetary policy. to answer your question, factors like the impact of the slowdown, how much that will impact the growth of the thai economy, that's one. seco second, domestic demand. certainly logical consequences, the production and purchasing powers and consumption. when in a will come. >> all right. and just got heard from the central bank, it's kept overnight rates unchanged. 5.75%. borrowing rate at 3.75. inflation environment they say
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remains fairly benign. an independent economist joins us now. andy, good to see you. so all the major banks today around asia and new zealand keeping rates unchanged. is that the way we're going to stay for a while? >> yeah, i think you'll see it the rest of the year. inflation hasn't completely gone away and actually it's coming back. you look at food price, energy price, house rent, the qe-3 decision by the fed will likely boost inflationary pressure furth further. so i think their hands are tied. >> you mentioned the fed. would they prefer it if the fed did nothing? >> i think the asian countries in general are against qe because the people here are savers. and they have a lot of dollar
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assets. what the fed is doing is basically to cheapen the dollar and it helps out wall street. it's not really good for the countries here. >> andy, there is so much concern about capital flows into those economies back when the fed was stimulating its previous rounds of bond purchases. it seems as though those have gone away. was it more about growth prospects than it was about the fed? >> i think the capital in-flows did do a lot to the bubbles here. you look at what was happening in the korea property market, and in china's property market since 2008, and i think that there has been a big bubble, but like any bubble, there's time to inflate. so hot money not willing to xhas a losing story. but we do not know where the hot money will go next.
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it could go into food and that's going to hurt everybody. >> a great point, andy. it will hurt consumers across the globe. we'll be back with more from andy in just a little bit. >> just over an hour and it ten minutes into the trading day in europe, stocks weighted to the down side. decliners outpacing advancers by a little less than 7:3. we're at the session low. stocks here near 14 month highs, so put these moves into -- ftse down 0.1%. xetra dax down half a percent. up nearly half a percent yesterday. cac 40 down 0.6, yesterday up six points. ibex down about a percent. keep your eye on the bond markets particularly italy. an auction will take all the focus. yields still here around the 5% mark. we did sort of get through that yesterday. we have an auction coming out today in italy. they'll raise about 6.5 billion
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mainly for the 2015, they have an off the run five year, but this is interesting, they have a new 15 year benchmark which they're rolling out today, first time since july. this year the yield is 6.8%. but for some reason we've got it wrongly labeled. but this i'm presuming is the 15 year 5.76%. but they actually are the three to five and the 15. so apologies for the labeling. euro-dollar 1.2913. dollar-yen down to a seven month low. 77.62. aussie dollar just above 1.04. sterling 1.6116. we have seen dollar weakening going into this fed meeting. that's helped commodities out, as well. brent nudging still around the
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116 mark. just below at the moment. 115. 76 as we look at renewed middle east tensions of course. let's now move our focus away from europe 2r5ids session over to what's happening in asia and chloe has all the latest. good to see you. >> good morning. take a look at how the asian session faired. three markets in the red, two range bound. one the japanese market just edging up just under half a percent. the iphone effect was pretty much felt in japan, that's about it. core rkorea korea, taiwan, a lot suppliers looking muted. already the nikkei daily saying the japanese government will downgrade its economic assessment tomorrow in a monthly report for the first time in it ten months. part of that reason is because to factor in the chinese slowdown. and take a look at what happened in greater china, once again more weakness coming out of the
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shanghai composite. reports suggest that banks are being nudged to support lending for infrastructure, but ironically, it's the coal and cement companies that actually drag the shanghai composite lower and also some of the banks, as well. i think there's still a lot of skepticism over the follow-through, the impact of that spending plan. infrastructure spending plan. the korean market, not really reacting much to that surprise. australia weak by half a percent. we have a slowly watched inflation print coming out of india tomorrow. already expected are that wpi will move up and that could complicate matters for the indian central bank which meets next monday. remember, tomorrow's inflation print is the last macro data to come out, so it will be a big one that we will be looking out for. >> thanks very much. i want to bring you the latest on the bae/eads deal, airbus saying they this welcomes
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possible news coming. it would not affect daily operations at airbus and that future strategy and manufacturing should all continue as is. reuters talking to a source familiar with the deal says the planned deal would mean that germany, the uk and frachbs each get a special share with the sole purpose being to block a hostile take over. and shares from other governments would grant no veto rights. it would lead to the shareholder pact and the size stakes held by individual shareholders will be limited. and ross, we should mention invest tech cutting bae systems to a sell. and so we'll have more on this story later. >> plenty more out of that for a few weeks yet. also later on in the show, plenty more to talk about. we'll get into the showcase of entrepreneurs. fledging businesses in the
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recession. that's in the next half hour.
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the iphone 5 hits stores in the u.s. and nine other countries next friday.
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apple says you can start placing pre-orders as soon as toll. it's pretty much what the rumor mill expected. thinner, lighter, has a bigger screen and will run on 4g networks. the connection port is smaller, so that means you'll have to buy an adapter. they also upgraded the ipod touch and ipod in an know and its iconic ear buds which it's now calling ear pods. apple shares reacting positively. adding 0.8% typically you see some underperformance after a new product laufshlg. asian supplier stocks mixed in reaction to the release. japan's declined. lg and hynix slipped. taiwan was flat. for asian suppliers, the latest iphone offering was disappointing hardware wise. we'll have more on that a little later in the show. >> i'm very disappointed with the who you new connection thing. >> the nine pins versus the six.
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we're still sorting it all out. >> not that we have iphones. meanwhile the dutch liberal party clinched a narrow victory at yesterday's general election. carolyn is in the hague with the reaction. hi, carolyn. >> reporter: hi, there, ross. i'm joined by two very important guests. the chief strategist the ing investment management and the director of cpb, the government's main economic policy adviser. this morning we think this is success for europe, but there are limitations for the netherlands support. to what extent do you think this is a success? >> i think it's quite a big success in that respect. it's clearly a move to the center of the political spectrum in europe, there by creates less risk of another political exodus over here and i think also you will have now a coalition
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government which is more inclined to think more towards the european solution and a message that could risk political tension and potentially departure of friess. so i think all in all it's quite positive outcome. >> last week the prime minister said there won't be a third bailout package for greece. do you think he's firm on that? >> i think what we said before is right, that in general it's a pro european election outcome. so whatever happens the attitude of the government will be in favor of preserving the euro. and what exactly will happen, we'll have to wait and see, but the general attitude, i don't think that will fail. >> the other big issue is reducing the rev sit to gdp ratio as mandated by the eu. but the tricky question is how
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will they do it, will it be driven by new growth measures or a continuation of the austerity measures. >> i think the major question for the coalition negotiation to start now is whether they agree on a positive so that both agree on a reform program. or that they will go into defensive mode and stick to the positions that they have and have to do austerity measures. i think the former is highly preferred but we'll have to wrat and see. >> let me get your take on what this means in investing. it was an important week for the eurozone. are you anymore constructive on investing in risky assets in the netherlands and eurozone? >> i think more generally you should look outside. yes, we're seeing a more
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constructive ecb, we've seen a positive court ruling by the kons tigs al courts in germany. now seeing a dutch election outcome which is pretty positive, hinge stable here. so it's positive for european risky assets and obviously that also comes back to dutch stocks or the dutch economy. we're very much a trading nation, we have multinational companies that benefit from recovering of the european economy. this is not going to deliver that very strongly, but we're moving more in that direction as a result. >> just very quickly, gentlemen, this week specifically we're seeing a yes, but mentally. to what extent is that really a barometer of how the other european nations are feeling in the north of the eurozone? >> we never have to overestimate our impact but i think in this
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case it will really matter. it will support the policies set out and i think it will be good news for europe. i also think that it will be good news for the netherlands. i would have been surprised if all the gloomy and noise that we have seen in the past couple of months will disappear and even for the housing market. i would expect decline in house prices will sooner or later short. there is a shortage in housing, so no need for further declines. >> all right. thank you so much for giving us your time and your insight today. ross, back to you. >> thanks very much indeed for that. andy has patiently been sitting by. let's it talk about china fairly briefly. we heard from premiere wen. that's fueled further talk.
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i wonder how much stimulus we're going to get because on the infrastructure side, these were projects that were already going to happen. >> yeah, i think that's the story, there's a consensus that too much investment is already too much. so further stimulus will do more harm than good. so i think therefore investors are impatient looking for some sort of quick fix. they're likely to be disappointed. i think slow growth is here to stay. china is going through transformation and the process will take years. it's three years at least. so i think the patience is really necessary right now. >> so we have a growth recession in china. what sort of annual rates now are you talking about? >> well, in times that i read statistics are not very
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reliableable. what we've seen so far is prourks average 4% compared to 12% in average over the last ten years. so that gives you an idea where the economy is right now. i think the slow pace will be with us for the next couple of years. >> okay. all sorts of implications. andy, great to have you on. thanks for your patience sitting there in hong kong. >> and the industry minister saying to expect a decision on a fuel price hike either thursday or friday. that of course has been widely speculated, the impact on consumers. a worry point perhaps for markets. says they cannot afford to postpone and the decision affected this week. thursday or friday is likely on that.
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the swiss national bank is keeping the floor unchanged, but warning any further rises will hurt the economy. we'll have much more on that in just a bit. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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shares in aeds and bae fall
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as analysts take a dim view of the mega americaner ci ee eer m citing a bumpy ride ahead. >> the german government vows to work closely with paris on the merger. >> and to qe or not. >> and central banks holding pat ahead of their decision. even the bank of korea keep rates steady as policymakers wait to see what the fed will do.
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stocks right now, we are down about a third of a percent for the xetra dax, tenth for ftse 100, but we are up near 14 month highs we have an italian auction today. >> to auction a 15 year debt. the first time in i think a year that we've seen something -- >> over a year. >> the ten year is moving slightly higher yield. 5.08%. >> more comments coming out on the proposed tie up between aeds and bae currently under discussion. the german government says it's in constructive talks on the merger. the stock as you can see down 6% and 5% respectively. ba e-traded up quite substantially. on the currency market, the
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dollar's been weaker across the board heading in to the fed decision. euro-dollar not far away from the four month highs we hit yesterday. you can see currently trading at 1.2922. aussie dollar slightly weaker. but the dollar's also down 4 1/2 month lows against the pound. >> staying with currencies for the moment, the swiss national bank has kept the floor for the swiss franc unchanged at 120 to the euro, but still warned it's too high and further appreciation would have a serious impact on prices and the economy. and i believe unemployment did it rise as well, up 0.2 this morning. joining us is chief fx analyst at swiss quote bank and peter, this decision this line with your expectations? >> pretty much. i think the one unexpected was the amount of downgrade in the growth forecast. went from 1.5% to 1%.
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we had seen the number in q2 gdp come down significantly, so it wasn't completely unexpected, but i think it was a little bit of a surprise. in regards to the floor, i think it was pretty much priced in. not too many were thinking that they would raise to 1.25 or above. the key to us in terms of the decision making policy in regards to the floor is that they've had a rapid expnks in their balance sheet to roughly 400 billion in reserves. about 70% of gdp and vast majority of that is in euro. that's really an explosive amount to be sitting on. and you know in the currency markets they have a very bad habit of going through them and i think the s&p is very aware of that and don't want to at that time additional risk of changing the floor. >> some saying is this floor needed given the rebound in market sentiment lately around the euro. what's your view? >> i think it is needed. the proof is in the pudding.
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the economy in switzerland has held up remarkably well. the inflation level has bottomed out in q2. and we're starting to see sort of an easing in the swiss franc. so while we're seeing significant weakness in europe, switzerland has held up resoundingly well. and i think that's proof that the s&p was correct in their decision. >> the dollar has been weaker across board. four month lows against the pound and euro. seven month lows against the yen. is it now all in the price? what happens? >> i think it's still being debated. i think if you just cruise through the general analysts view, there's still expectations that bernanke's not going to pull the trigger on additional asset purchases this afternoon. so i think there's some doubt. our view is that his conversations or his rationale in jackson hole to us pushes us
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towards the fact that they are going to go to qe-3 and that's not all priced in, so we should see continued dollar weakness which in the currency market means significant stress on the dollar-yen and that means the mof and boj will be especially diligent near term. >> fascinating to see especially people warning on japanese equities because of all this. it's all interconnected. peter, thanks for your time this morning. more on this attack on the u.s. embassy in the yemeni capital. demonstrators trying to storm the embassy and security forces have opened fire. so we have the yemeni proceed tors storming it and forces opening fire in response.
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so increased tensions. oil prices do not reflect economic fundamentals as we keep saying. reflecting a lot of other things. >> and speaking of the middle east, we also have the eu saying syria's assad should go. he's saying this there's 200 million euros available for support, this in a meeting with morsi. barroso saying they're offering egypt 500 million euros in financial aid if talks with the imf do go ahead so that macroeconomic financial support in place for egypt from europe, we'rele seeing barroso now condemning libya's attacks on u.s. diplomats. okay. to guard against the economic downturn, one of japan's major trading houses has a new ingredient called pineapple. this story from the nikkei. >> hi.
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main trading house in talks with dole so buy their packaged food operations such as canned fruit and fruit juices. also set to pick about up the green grocery business in asia. the total deal is to cost around $1.7 billion. these yunt yunt units made upf their sales in 2011. but they are restructuring efforts since falling in the red back in 2010. the two companies want to reach a deal by the end of this month. they plan to take over operations by the end of the current fiscal year ending march. itachu is hoping there will be healthy appetites for the fruits and juices and planning to use the dole brand to sell fruits and vegetables made in japan helping farmers expand their businesses overseas. that's all from the nikkei business report. back to you. >> thanks very much.
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thai bev with a key vote. thai beverage vote in a fort night. still to cork asian suppliers give out mixed vibes. where's the love? we'll explain.
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after a 50% fall it for facebook stock, some relief yesterday. finally comments from mark zuckerberg the night before, the first time he'd spoken. and look what happens. he speaks -- >> 7.7%. >> a bounce back. >> and now only down 45%. so problem solved. >> so he's clawed back 5%. joining us a lady who has made a very successful career in investing early in tech companies. not necessarily facebook. but she has lots of experience p realizing those investments. got a book out. welcome. you say this is the time for entrepreneurs to -- great to see you. nice to have you back.
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your own views first of all of facebook. you've spent a lot of time of realizing investments. in some ways was facebook a success for investors but what else has gone wrong for people who bought into the stock? >> and we have to put it into a very long time frame. everybody is focused on who made money and who didn't in the ipo. but if you take the longer term view, they have in a remarkably short period of time established themselves as a platform company. >> do you find the company attractive as an investment longer term? >> i think you have to watch it settle out, but the longer term view and i think for investors looking at how technology like facebook, apple, linkedin monetize, et cetera are
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transforming the world is that they have built-in ecosystem which has made facebook -- nobody could say that facebook is not changing the way that companies go to market. >> what is the opportunity that you see in mobile payments and where are we in the roll out of it this whole new industry? >> i think the founder and ceo of monetize did exceptionally well, when everybody was thinking sell software to the bank, he said this has to work for everybody in the ecosystem. so he was the first person i ever said the ecosystem of mobile money includes mobile carriers address banks and low erg the cost of capital for the
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individual. >> it's about having something everybody can pray with. >> absolutely. people like the excitement of disrupting things, but now for the digital david, he needs the distribution of goliath. whether goliath is a bank or tesco or whatever large distribution, could be a mobile carrier, but david and goliath need to dance. it if you're a car and a mobile payment is a digital car, you need distribution. and that's why those platform companies are important then. that's what monetize has created. they've created an ant hill. now everybody is swarming over
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them because they are a platform. >> so what -- you say this this is the age of the entrepreneur. every government around the world, right, whether the u.s., the uk, eurozone, they're all looking at we have to help the small guys out. >> what's interesting, i was out in the valley, in zurich, in four different countries. none of those entrepreneurs that are starting out even if they're one man band or 50 and they've just raised 10 million, none of them think of themselves as small. so we're not talking about kitchen table lifestyle entrepreneurs. we're talking about fast moving rockets, right? they think of themselves as young, sometimes as dws ruisrup but most importantly, they don't feel the asymmetry in what they're doing.
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>> it does speak to the desire too-t to look to these people and hope they're a catalyst for the next period of expansion. >> society works best when it's organized around the entrepreneur and entrepreneurs are forced to take total accountability. at the end of the month, if you don't have the money to pay the bills or if a product doesn't ship on time, whatever happens, you have to deal with it. and that message of self reliance is the only thing. that's the only currency in the world that we live in. we can't pass the buck, you can't look for what the government will do to help you. you have to accept responsibility. >> stick around because we'll talk about apple and suppliers. >> that's right, the success or failure of the new iphone 5 isn't just limited to apple. chloe cho will walk us through
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some of the top suppliers and what's at stake for them. >> the usual names on the charts here. these are the people that actually make the iphone happen. samsung, they in fact provide one of the key chips which is the applications processor. and that is the brain of the phone as well as reports do suggest apple is moving away from it south core rehe a rival shifting some of the chip orders to toshiba and hynix, as well. sony has also reportedly snagged the contract for the 8 mega pixel cameras. and taiwan makes the camera lenses. reports say that the gorilla glass screens are being made by sharp, japan display and l
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sgchlt display. the main new feature of the iphone 5 is its long term evolution telecom networking standard. this allows for very fast downloading speeds. good news for live video. and jpmorgan said qualcomm and erickson are supplying radio chips with quarter growth of about 23 million chips by the end of december. meanwhile, barclays has picked an assembly to be the top beneficiary. and take a look at how they fair. samsung was up about half a percent, but hynix sharp to the down side. also toshiba pretty much overall looking mixed. a couple of factors here. we did have a bit of a rally in the yesterday's session. so some investors are taking profits. but overall, i think the big sentiment out here is that the wow factor is a little bit off.
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and let's also not forget the thinking is lte, apple iphone, they are not the first mover given that samsung and a few other phone companies had already come up with that. and there's also something called nft, which is a mobile paying platform and they didn't incorporate it into the apple iphone 5. so that's also another thing. so maybe do they lose cult status, i don't know. we'll have to wait and see. >> joining us for more is head of asian x japan tech. kirk, quite a title. welcome. you can tell us if the iphone 5 can save sharp? >> we do. we're actually quite impressed with the iphone 5 launch today. we've covered asia supply chair were not surprised on the new features. it's thinner, lighter, 4g lte. faster process.
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et cetera. apple win by the software and ecosystem. if you think about last year, apple 4s was launched, people complained because it looked just like iphone 4. apple sold 37 million units. we think this will happen again this december quarter. the other thing is that you look at the launch schedule if apple, you can pre-order this friday. shipment in nine countries the friday after. 22 countries more. is we believe the sale will be much better than last year which already was very impressive. >> so do you actually think we've seen pressure on shares of sharp which i singled out just because they're having so much trouble lately. why is this viewed as a more positive catalyst for a company like sharp who will be so involved in the production of this device? >> two things.
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number one, the so-called buy on the rumor, sell on the news. everybody knew the iphone was coming out. so the share phone for iphone components has been going up in the last two, three months. so today a lot of profit taking but we think it will go back up. sharp is the only one not the qualified yet, so it takes up profitability issues. so that's why sharp specifically the share price has been under pressure. >> you think these companies are all worth buying on the iphone 5 supply chain story? >> exactly. more than 100 components within the iphone, so we do not think
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every stock will go up. key components have price advantage that will not be squeezed. this year they could make up to 20 billion units per month. the other thing you mentioned, one of the new features is instead of glass, it's micro casing. so they'll do well. so the key components for iphone 5 with good margins will do very well in the december quarter. >> okay, kirk, thanks for that. it's extraordinary when you think of apple the biggest company in the world by market cap. we look at all the impact on supply chains there, from where
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you sit as a tech early stage investor, what is the biggest impact of apple? >> well, i think it gets back the dominant thing to understand is in which ecosystem -- if they're competing with somebody that's dominant on the an detro android, and you think back to the property dispute, it's not over yet in terms of defining where the lines are. i mean here in this country, we had phillips of quantum, apple infringed its ip. so somewhat hypocritical in many respects. but apple, whose ip, who is the owner, all of that will be determined over the next couple of years. it's not over. >> the lawyers win.
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and facebook still struggling in the win category here. julie meyer, see you at the festival next week. >> looking forward to it. reports say myanmar could thouns plans to rebuild its telecom system. it's become a priority as new businesses struggle off the ground for telecom licenses set to be granted. they could start 4g services as early as next year and in fact only more korea has a lower cell phone pen straight rate. still to come, mark zandi gives us his predictions for qe-3. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty.
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here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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here will your headlines. shares in aed and bae sinking as analyst cite a bumpy ride ahead for the aerospace sector. >> tensions flare up in the middle east as yemeni protesters storm the embassy after the killing this benghazi. >> and to qe or not to qe. the central bank looks to provide a fresh boost to the u.s. economy. and asian central banks holding pat ahead of that fed decision.
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a very good morning to you. news that yemeni protesters have stormed the complex of the u.s. embassy in the yemeni capital today. break test tors torched a number of dip low malt tick vehicles and security forces used water cannon and warning shots in a bid to drive them out. but protesters storming u.s. embassy compound in the yemeni capital. we'll keep up to speed with reaction to that. >> futures are pointed lower. but we are potentially going to see a marginally higher open.
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have to take fair value into account. nasdaq pointed lower by about five points. s&p 500 just barely in positive territory as of now. we'll see how they react as we get closer to the start of the u.s. trading session. of course all eyes on the federal reserve today. cnbc ftse global 300 just barely negative this morning. european markets, all major bourses pretty much in the red. german government says it will take a closer look at the potential aeds/bae merger.
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>> and biggest gainer of course over the course of the summer. we'll keep our eyes on the bond yields. today we'll be focused in italy. ten year spanish yields post the constitutional court approving, a little bit higher. ten year still around the 5% mark, but we have italian auctions coming out today. they're looking to raise up to 6.5 billion across three auctions. most of that in the three year. what is interesting as far as italian yields are concerned, we'll get a new 15 year issuance going back to the benchmark 2026. the first time since july last year that they've attempted to sell this. so interesting to see how that goes. italy thinks there's enough confidence to get a long term debt auction away. we'll have the results of that in around 15 minutes.
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dollar has been weakening ahead of the fed meeting. sterling-dollar, around about four month highs for the pound against the dollar. aussie dollar up 1.04. dollar-yen 77.68. and euro-dollar four month highs at the month, 1 .2920. so that's why we stand right now in europe. >> take a look at the shanghai composite, down three quarters. remember the metals, coal, infrastructure, related plays continue on skepticism on that follow through of the huge infrastructure spending plan. iphone effect felt here more
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than any other part of the region. the nikkei reporting that the japanese government could downgrade its economic assessment for the first time tomorrow in a monthly report and that will be the first in ten months. s cot pi no real reaction to the rate freeze. analysts were really expecting a rate cut in light of did i say hal data out of south korea. take a look at the indian market. w about pi will be closely watched in light of the fact that the rbi meets next monday. back to you. >> rosz, there's been so much activity already this morning especially in the middle east. on that note, just want to mention sources have told cnbc that yemeni protesters have not
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penetrated the u.s. embassy there in the capital. that they are surrounding the embassy. this according to a security source. >> they're on the edge of the compound as opposed to the embassy building itself. >> still trying to figure it out this morning and we'll keep an eye on the reaction and on any further news as we follow that story throughout the morning. it's decision time for the u.s. federal reserve later today. the fmoc will announce its decision 12:30 p.m. eastern, that's when the statement is due out. and then at 2:00, the fed will release new economic projections followed 15 minutes later by ben bernanke's press conference. so 2:15 eastern time, that's about 7:15 here london time. joining us now, mark zandi, chief economist out with a new book this week called paying the price. ending the great recession and beginning a new american
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century. mark, welcome. i guess you haven't given up yet on the u.s. economy. and do you think the fed can do something to spur growth here? >> yeah, i do. i think that the federal reserve's efforts have been successful in getting the recovery moving forward. there's a lot of debate about additional qe, but i think it would be helpful to the economy. i'm not so sure it's necessary right now. i think the economy is growing strong enough. but later this year when we're debating our fiscal issues, the economy will be weak and additional qe at that time would be helpful. >> goldman out with a note qe-3 would boost growth next year by a quarter to a half percentage point. could it have a bigger boost or is about eliminating the down side risks? >> well, of course it depends on what qe is.
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exactly what the federal reserve decides to do. if it's bigger and bolder, then he the impacts could be significant, but it really does depend on how they design this. >> it seems if they want to try to improve credit and creation of job, they need to go open-ended and they need to open-ended purchases of assets linked to loans in the real economy, don't they, rather than just buying treasury. they need to go open-ended and put it in the real economy. >> well, i think they're likely to buy mortgage securities to get mortgage rates down and that is helpful to get cash into the
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home ener's pockets. it helps in terms of home sales and of course that's a big part of getting the economy turned around. and getting long term rates including treasury rates down also helps the stock market. so i don't know if they have to directly link to lending, but that would be a very big step, something more similar to what the bank of enfwland has done. but i think they can be effective without going in that direction. but you're right about the open ended part of it, that would be more effective, but my guess is they probably want to wait again until late this year, early next when we'll be debating some pretty significant fiscal issues in the economy. >> first of all, it sounds like we should change the fed's mandate to a certain price target on the s&p 500. but you can get specific to what you expect today? you you expect another round of asset purchases but not necessarily today? >> well, i think very likely
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they'll extend out when they'll raise rates for the first time. it's late 2014, it will be mid 2015, that is going to happen. i'd say even odds probably a little bit better than even odds that they do kind of a standard quantitative easing, qe-3 would be like qe-2, mortgage securities, 600, $700 billion worth. i think it's much less likely they would do open-ended qe at this point. if i were king for the day, i'd be arguing that we don't need qe at this point. i would wait until after the election when we really need it. a huge round does become less effective, so i would save it for when i really needed it. >> this very a choice. the right thing to do is maybe to wait for when they need it, but there is a market anticipation built in which they may feel the need to satisfy.
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>> we'll be back with mark in a second, but first apple unveiled its iphone 5 last night in san francisco and jon fortt has filed this report. >> reporter: yesterday here in san francisco, apple announced the iphone 5. and as most people expected, it did have that four inch diagonal screen, it does come with 4 g lte. but there's more to the story. it has a retina display and also comes at four inches diagonal and updated camera, updated imaging software. there's even a little $30 accessory where you can have a little wrist loop for the ipod
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touch, treating it like a camera. siri will work on it. they're really positioning it more as a mobile computer, mobile camera, less as just sort of a music layer with a little bit of an ios add on like the ipod touch was in the past. now, this version, this bigger version of the ipod touch will cost $299. the old version started at $199. so it will of course be interesting to see how that sells. they also did a big update of the ipod in an nano. it was just a little square device. they've updated it, made it wide screen. it's now a touch screen. it doesn't have ios built in, but it works via touch and now it plays video. something the previous versions hasn't done for a couple of years. so apple positioning this ipod leanup also with multiple colors to attract a broader media audience making the audience for this holiday season also covering a whole range of price points when you look at ipod
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through iphone through ipad, definitely a more interesting mobile lineup than they had a couple of days ago. >> worth mentioning that there will potentially be significant economic boosts. mark zandi, a report circulating from jpmorgan saying that you go back to last october, we saw a boost in u.s. retail sales related categories from the iphone launch. if this is as big as the last one, maybe it could -- who needs the fed when you have an iphone 5. >> right. that's going to save the day. i think jpmorgan piece is correct directionally, it will be a boost. i'm not so sure it will be as large as jpmorgan supgted in part because it's likely that people who buy the iphone will spend less on something else. they only have so much cash and if they're using it on the iphone, it's not inexpensive, so they won't be out buying other things. so net/net will probably be
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better, but not quite as good as i think jpmorgan is expecting. >> well, we'll see just how many of those devices are sold. the boost by the way not just in the u.s., we've been discussing how people all over the world will be affected. mark, stay with us. just want to bring you this latest news. this morning lots of attention in yemen where protesters have stormed the u.s. embassy. potential lay copy cat attack. sources have told cnbc that they have not penetrating the embassy, they are surrounding the embassy. there have been warning shots fired into the crowd. >> it follows the dead of the u.s. ambassador to libya. we also now understand that police and protesters are clashing outside the u.s. embassy in cairo. these are live pictures being fed to us. the health ministry suggests 30 people have been injured during sporadic clashes through the night outside the embassy where on tuesday thousands of protesters tore down the stars and stripes and replaced with a
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black islamic flag. so we now have protests in both yemen and egypt. and of course the death of the u.s. ambassador in libya. we'll keep our eyes on that. also still to come, we'll be heading out to the hague for the dutch prime minister secured a second term in the general election. he'll have to work with his biggest rivals in a coalition government, but the key thing is it was the pro euro party that took much greater proportion of the vote. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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yeeding 5.3% and it seems to have paid off. seems to have paid off. 5.9 in july 2011. so lower than july last year. and so the the three year, yields down sharply on that, as well. majority of this auction 4 billion. that's the maximum targeted. yield 2.75%. it was 4.65% just a couple of months ago in july. so again, we are seeing the benefit of recent actions.
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mark, you look at all the news out of the eurozone including this auction for italy. managed to raise 15 year paper. seems to have taken sanction steps in the last few weeks. how substantial do you think the long term picture? >> i think substantial. the ecb's being as last week were quite important aunt sthel's do whatever it takes to keep the euro zone together for the information he seeable future. as they say in the bond market, they significantly reduced the tail risk so this significantly raises the odds that despite europe's problems, the eurozone will hang together and european economy will navigate through this. >> hang together or hang separately perhaps.
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mark, stick away. these are your headlines if you're just tuning in. shares in aeds and bae as analysts take a dim view of the merger. >> to qe or not. ben bernanke and the fed facing that dilemma today. >> and central banks staying pat ahead of the fed decision. meanwhile the dutch liberal party has clinched a narrow victory at yesterday's general election. carolyn is in the hague. and i suppose the key thing here is how disappointing the anti-euro's parties were in terms of attracting the vote. >> yes, absolutely. in terms of the far right party, they lost 43% compared to the last elections. so that is massive defeat for them. and the outcome for the pro european parties, the liberal and labor parties, are much clearer than we actually thought. so they will be forming a coalition over the next couple weeks or months. it usually takes three to four
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months here in the netherlands. we'll see if they can do it any faster this time around. so this is a good vote also for brussels. let's listen into what the spokesperson of the winning party told us earlier. >> there's one thing certain and that is we will meet the 3% deficit budget lineup. i think it will happen already in the next year. the forecasts will be that we will be ending at 2.7 more or less, so it is possible for the dutch and i think in terms of austerity, all parties haves also have a tradition. certainly we're more on the severe side. but i think this will happen. >> while this is clear lay pro european vote, it's not a vote with unlimited support because the dutch, too, they're on the brink of another recession. they are facing a deep housing slump and they're one of the biggest contributors to the eurozone bailouts. and they, too, are suffering from the bailout fatigue. but they have realized we can't
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do without europe because after all, three quarters of their exports go it to the eurozone. back over to you. >> thanks for that. >> stick around, because still to come on the program, renewed fierce over more unrest in the middle east. we'll give you all the news and discuss the impact.
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protesters have surrounded the u.s. embassy in the yemeni capital. it has not been pen straighted, but forces have brought out water cannons to control the crowds. this comes two days after an attack if libya that killed the u.s. ambassador and other consulate staff. president obama has called on leaders in the middle east to discuss security following the violence. clashes are also taking place in cairo over an anti-islamic film. so far oil markets pretty steady. >> the brent move was down to 115, so certainly numbered pack over. >> we have more from matt smith. how significant is the latest news? >> it's obviously just ratcheting up tension in the global oil market.
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this isn't being reflected through prices just yet, but with concerns in various different facts, we have problems with iran rumbling on and now added to by these concerns in cairo and libya and now in yemen. so if this keeps on ratcheting up, we have concerns in syria, as well, this could really start to impact oil prices. >> and it's important because in some way it is really hasn't yet. you could argue that the move up in oil prices has been consistent with renewed growth expectations, bado you see gymerses of a supply side aspect to oil activity? >> we've been seeing oil price run up because of the spiked highness brought on iran, the sanctions there. 1.5 pill i don't know barrels a day from the market. so that's why we've seen prices rise in conjunction with
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expectations of qe-3. so we're seeing markets flat and nervous focused instead on what the fed will say rather than the news coming out of the middle east. >> if we get qe-3, is that already in the price or will it send it higher? >> i think it will send it high are just because of the inversion relationship with the dollar. you see the dollar move lower, we'll see crude propelled higher. and so that's just a natural reaction that we should see from that. >> matt smith, thanks very much for coming from the energy summit. mark, when you look at the economic growth figures, clearly it doesn't justify oil prices where we're at and you hear matt saying we can could go higher. how much of an automatic choker of economic growth is the oil price going to be? >> it hurts. i do think qe-3 is already built into oil prices. so i wouldn't agree with matt in that regard.
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i think the market is fully anticipated. but i think the tensions in the middle east and i do agree with matt that iran is the key here have lifted oil prices. but every $10 per barrel oil cuts global gdp growth by a couple tenth of a percent in the subsequent year. so it hurts. and when we're at 115 on brent, that's a high price relative to where global growth is right now and that's certainly a paul over global growth. >> census figures yesterday showing higher poverty rates in the u.s., an increase in income inequality last year. is the oil price and food price increase we've seen a significant contributor to that in your view? >> yeah, it is. real median income is as low as it's been since 1995. and last year's decline was a big part of that was related to the increase in food and energy
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prices. the higher rates of inflation. but the poverty rate actually held constant and the one piece of good news is the number of people who have health insurance. in the u.s. we have this problem in a a large share of the population doesn't have health insurance. actually the share that doesn't have it actually declined. so that is a glimmer of hope. and my sense is that this data is for 2011. 2012 data should be better. so after some tough years, i think we should start getting better news going forward. >> mark zandi, thanks for all your time this morning. >> good having you on. still about a half an hour of the good stuff to come. the wraps have come off the new iphone. 5 is here. but is the market going to go about a man in as for apple. plus the aeds/bae tie up, airbus is happy about it, are the investors.
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well come back. these are the headlines before shares in aeds and bae sinking as analysts take a dim view of the mega merger citing a bumpy road ahead for aerospace. >> tensions flare up in the middle east as yemeni row test tors surround the u.s. embassy two days after the killing of
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the u.s. ambassador to libya. s also tensions in cairo, as well. >> more qe or not, that's the question before the fed today as the central bank reevaluates the outlook for the u.s. economy. not much movement in u.s. futures. of course waiting to see what the fed may or may not do later today. dow jones, if you take fair value into account, it's poised to add a couple at the open. nasdaq in negative territory. s&p 500 roughly flat. this of course follows major indexes at multiyear highs, at or near i should say. europe has been a consistent picture with this. red across the board. ftse 100 down. should mention the xetra dax has been up on the range of more than 20% this year.
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much more so if you take a 52 week view. cac 40 down three quarters of a percent. ibex 35 down 1.2% as analysts perhaps reevaluate or take profits after the rally we've each following the ecb's activity. >> already today we've had plenty of opinions on what investors are to do ahead of the fed. here's just a recap of some of those thoughts. >> i think the and you are row will weaken if we don't get qe. but a lot is already priced in. >> my advice to investors for the past two years with regard to emerging markets is to underweight them sharply against the u.s. and over that period of time, the u.s. has outperformed in dollar terms by about 33%,
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34%. >> we're looking at the sk tore by sector basis, autos is probably in the short term where we will see probably close your eyes and continue to remain exposed, the valuation opportunity is still there. short term opportunities are there. >> some thoughts we've already had today and things keep getting better for the eurozone. dutch elections have gone well. pro european parties getting more votes. and the back of it, italy today for the first time since july last year, 2011, has raised some 15 year money. yields pretty good. 1.5 billion. the yield 5.32%. it was 5.9 in july last year. they also raised the maximum allotted in the three year bench mark, yields coming down sharply, down 2.75%, 4.65% was
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what they got in july. so -- >> so what are we also worried about? >> this is looking like sustainable were rowing. >> all they had to do was apparently talk and not act. and that's been enough to calm the market for now. i just wonder as we start to evaluate the political brinkmanship that has to happen wherein investors come back in. >> you would think if spain do get into a program, you would think that probably would be enough for italy. right? because then everybody -- well, it is going to work and that would mean they would need to get -- >> all i know for a politically untenable situation, they have managed to stitch this thing together for the time being. >> they keep putting enough fingers in the holes, right? >> yeah. in any case, the iphone 5 is hitting stores in theist and nine other countries next
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friday. apple says you can start placing pre-orders tomorrow. the twice is pretty much what the rumor mill expected. thinner, lighter and has a bigger screen and it will run on 4xwchlt networks. the biggest complaint, the connection port is smaller and that means you'll have to buy an adapter. which apple is glad to sell you for $30. they also upgraded the ipod touch and nano and the ear buds which are now called ear pods. apple shares rallied adding another percent in frankfurt trade. this despite the fact that they usually are weaker after product launches. bridget kerry is joining us. interesting to watch the general commentary around the apple devices as there's nothing super impressive here, but what seems to be pleasing investors is the idea of the scope of the rollout of this device. >> you have a device here that is definitely an improvement from the last version, but there was no wow big innovative moment
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where we're going apple is creating magic again. really just a better phone. and so you might feel left out if you don't have the new one. >> left out or at this point people may have their that cracked glass screen and they just need another replacement device. >> that's actually a good point because this time there isn't grass on both sides. a lot of people complain that it was so easy to shatter the last two versions, but now there's aluminum on the back. >> that potentially may be to their own detriment if they don't crack it for the next time around. but coming back to the point about distribution, because the market's focus is on the availability of the iphone and how soon that they'll be able to get their hands on it. >> yeah, you'll be seeing this sold at several countries next friday. you'll be able to pre-order this friday, though. so there is going to be also a lot of countries will have it at least by the end of the month.
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>> walk me through the smaller connection port here. how much of a pain is this going to be? >> it will be a bit of a pain if you have accessories. the whole key here is that with a smaller port to connect to your speaker system, you'll need a handy dandy $30 adapter. now, if you don't are that you'll probably see a lot of accessory makers be coming out with new versions because you'll want to just put it right into that speaker system without messing with some extra accessory and you want to look nice. >> but about the line is most people will get theed a dac ada right? anybody going to buy this, it's the selling price plus another 30 bucks for the adapter. >> at the very least, unless you'll be forking over more cash for extra speaker systems and a whole new set of devices. and from now on, this will be a dock that apple has said they will have for a long time. we also see the smaller dock in their music systems, the ipod nano and touch.
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so they will stick with the smaller dock for a long time. >> what's a long time, until the iphone 6? >> you never know what their definition of a long time is. exactly. >> i guess that was the point. bridget, do you like the phone by the way? did you think compared to the competition, do you pick it up and go, yeah, okay, what was your personal reaction? >> apple always makes a great product. and that's why you'll see massive lines. every year the next iphone oversells the past one. as for me, when i see other phones out there, other makers like nokia and samsung, they're doing crazy new technology that makes you wow. whether you wave your phone in front of a cashier to pay for a coffee or have a big pen on your tablet, apple doesn't have that wow moment in this one, it's just a better phone that you can trust will work good. >> we'll see if that's enough. bridget kerry, thanks for your thoughts this morning. we still don't have iphones.
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probably not going to get one anytime soon. >> i'm waiting for a work one. >> you're waiting if to it to be handed to you. >> still to come, the proposed merger not going down very well with investors this morning. we'll discuss why. ♪ ♪ i can do anything ♪ i can do anything today ♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism.
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break e. protesters have surrounded the u.s. embassy in i can't men capital. this comes two days after an attack in libya that killed ambassador and other consulate staff. president obama has called on leaders to discuss security. >> and we also have live footage of a standoff going on in egypt. these are pictureses from near the u.s. embassy in the city. health ministry says 30 people have been injured during sporadic clashes outside the embassy. we'll continue to keep you up to speed on the tensions in the middle east.
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meanwhile, perspective deal to talk about. a possible mega merger of the defense giants. analysts saying investors take profits in bae. it did rally yesterday. bru some say it highlights the cheap valuation of the stock. talks of a deal will dilute airbus's attractiveness. the companies will keep separate share listings this both london and paris. >> a combination of the two companies would create an industry giant to rival boeing, but jim mcfesays he's not thread
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by the deal. >> let's bring in our very own mr. phil lebeau. phil, we've been looking at this and it's pretty clear on this side of the pond that the governments in europe must have known about these discussions, so therefore there was maybe takes set approval. how about is the hurdle in the united states particularly from the second tier defense contractors? >> it's substantial, ross. and good more than ning to you kelly. i think what we'll see in the u.s., we call them second tier, but they're huge in their own right. lockheed martin, northrop grumman, general dynamics, those companies will feel immense pressure to merge or at least look at combinations in order to have the size to compete with a
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combination of aeds/bae and boeing. $90 million worth of revenue last year. boeing still is technically the largest at $67 billion in revenue. and as you mentioned, the approval here in the u.s. is going to be key because really this deal is all about greater access to the u.s. defense market. despite all the objections, when you look at the plants and the production facilities that both bae and aeds now have, or are under construction, i think they'll have enough clout to ultimately get the deal to go through. >> phil, there's certainly a lot of focus on whether this is an effort to kind of get aeds operating more -- thought of more as an independent company and not as a frank company german company. but we're learning that there will still be perhaps gold be shares of these governments.
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>> i'm not sure that it will chankt game remarkably. i think at the end of the day when it comes to using the u.s. defense contracts, i it talked with one person yesterday at boeing and one person in the defense industry and both said the same thing. they both said, look, when you look at the influence that bae already has here in the u.s., for aeds, this is incredibly smart. it buys them greater access and greater acceptance in washington as being a u.s. player. nobody will look at them as a u.s. company, but as a u.s. player. and that ultimately i think is the key for them getting that approval here in the u.s. >> okay, phil lebeau calling in this morning from chicago. thanks very much for all of that. >> always good to speak to phil whatever time of day. meanwhile daimler has been warning that a merger could lead
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to the dissolution of the franco german shareholder fact and that could force the company to sell it stake in aeds. patricia has more. they have a 20% stake? >> when it comes to voting, 22.5%. but actual share stake at the moment, they have 15% and they're trying to divest it because they have not been successfully at doing so, so the deal really was between daimler and the german government selling about 7.5% stake. the question now, is this going to go ahead. yesterday they would they will do it until the end of the year. however if the share pact from germany and france should be dissolved due to a possible merger, then why not sell it in the open market. perhaps they would get a better price for the stakes she in aeds. and the latest sources talking about the possible structure going forward for these two through this merger saying that
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it would give france as well as germany and the uk a golden share which would prevent the new merged entity from a takeover. and the economy minister says they're having very fruitful talks with the companies and also with france on the issue. >> pa treasure sha, thanks for that. >> fruitful they say. okay. you're watching "worldwide exchange" and these are your headlines. shares in aeds and bae sinking as analysts take a dim view of that proposed $48 billion mega merger. >> to qe or not. the fed facing that dilemma at the fmoc. >> and tensions flaring in the middle east as yemeni protesters surrounds the u.s. embassy. every time a local business opens its doors, or makes another sale, or hires another employee, it's not just good for business. it's good for the entire community. at bank of america, we know the impact that local businesses have on communities.
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that's why we've extended over $4 billion in new credit to local businesses across the country so far this year. because the more we help them, the more we can help make communities stronger.
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getting more reports out
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concerning the attacks around the u.s. embassy in yemen. washington says no casualties reported in the storms of the compound. no penetration of the embassy building itself. >> this as we're getting reports of people wounded in cairo. it's decision time for the federal reserve. the fmoc will announce its decision at 12:30 followed by its release of its economic projections. 2:15 ben bernanke will take to the podium for his press conference. also on the agenda, a couple economic reports out. at 8:30, it's weekly jobless claims expected to rise by 5,000 to 370,000. and at 8,000, august ppi, producer prices seen up 1%, just one tenth excluding food and
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energy. joining us more is doug ramsey. good morning. let's talk a little bit about inflation. it's gotten a lot of focus as people worry about the u.s. consumer producer price report out later today showing a gain of 1%. will that keep the fed from acting? >> no, i don't think so. core inflation is very well contained. we'll get a little bump from the supply shortages and ag commodities this summer, but i don't think that will be any sort of constraint on them. >> what do you think the fed will do today? >> it's a tough call. the s&p 500 is at a new bull market high. nearly a five year high. and less than 10% below an all-time high. the economy is in it fourth year of recovery. i know it doesn't feel like this, but personally i think
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they'll just stand aside. but i think with everything going on in europe and the european sfcentral bank ready t do something very creative it wouldn't surprise me to see bernanke maybe announcing qe-3 more in support of european policy being as than what is needed here. >> you think sentiment is too bullish on stocks, so would you use qe-3 as an excuse to sort of sell on the bond rumor and then sell on the fact and lock some gains in? >> it depends on your time horizon. we're still sick likely bullish. we think it's the seventh or eighth inning and we'll see new all-time highs in the s&p early next year. but i do agree if you have a shorter term time horizon, people have very much warmed up into rally in the last four to
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six weeks. so that being said, with all excitement about the policy being as that could be announced in europe, i've been expecting a rather traditional sort of turbulent september and october. and then a strong start to the next year. >> the biggest risk to your all-time high target, what would be the biggest risk be? >> i continue to think it's the economic numbers coming out of china. those are notoriously unreliable. the shanghai composite i guess we've -- go ahead. >> doug, we'll have to leave it there. we're out of time. but i think a lot of people agree with you about the risks of china. that's it for us today. >> "squawk box" coming up next. we hope you have a profitable day.
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good morning. crisis in the middle east. protesters storming the u.s. embassy in yemen less than 48 hours after american diplomats were killed in a consulate attack in libya. we've got the fed all over us today. the fmoc wrapping up a two day policy meeting with a decision on rates and a news conference by chairman bernanke. and everyone is still buzzing about apple apparently the morning after the iphone 5 announcement, a uncle of cup hc analysts saying stock price could go into quadruple numbers.


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